1. Which of the following would you expect to decrease the demand for tennis racquets?
a. A decrease in the price of tennis balls which are complements in consumption of tennis racquets
b. An increase in the supply of tennis racquets
c. An increase in the price of tennis racquets
d. None of the above would decrease the demand for tennis racquets
2.Consider the market for pop. Use the demand and supply equations below to answer the following 2 questions.
Qd=100-20P Qs=5P
(1)If the government imposes a price ceiling of $2 in the market for pop, which of the following will occur?
a. There will be a shortage of 50 cans of pop.
b. There will be a shortage of 40 cans of pop.
c. There will be a surplus of 10 cans of pop.
d. There will be neither a surplus nor a shortage because the price ceiling is ineffective.
What deadweight loss will result from a price ceiling of $2 in the market for pop?
a. $12.50
b. $37.50
c. $50.00
d. $45.25